Wednesday 30 August 2006 06 – LAWFUEL – Legal News Network – The Australian Securities and Investments Commission (ASIC) has urged Coles Myer Ltd (CML) shareholders to be wary of a recent low-ball offer from Direct Share Purchasing Corporation Pty Ltd to buy their shares for almost half their market value.
A recent increase in complaints to ASIC about unsolicited share offers in relation to CML has prompted ASIC to issue a warning about the importance of making financial decisions carefully. CML shareholders have been offered $7.50 per share – an amount well below current market value – from Direct Share Purchasing Corporation, a company associated with Mr David Tweed.
‘This offer is a bad deal because it substantially undervalues small shareholders’ CML holdings’, ASIC’s Executive Director, Consumer Protection, Mr Greg Tanzer said. ‘When you get an unsolicited offer where the price is well below the market price, you risk losing money by selling your shares for less than you can get on the open market.’
‘Coles Myer shareholders who receive this offer should check the price in any daily newspaper and obtain professional financial advice. Don’t sign until you fully understand that you are accepting a price which substantially undervalues your shares. Inexperienced or elderly shareholders, or those under immediate financial pressure, are often most at risk of selling their shares without carefully reading the offer and clearly understanding the implications’, Mr Tanzer said.
In April 2003, the Government introduced regulations governing these types of off-market offers to provide consumers with more protection. Under the regulations a person who makes an unsolicited offer to buy shares off market for a certain price must provide:
• a written statement setting out the market value of those shares on the day the offer is made; and
• a minimum of one month in which to accept the offer. Although it is not against the law to make an unsolicited offer to buy someone’s shares, it is illegal to mislead or deceive shareholders into accepting an offer. The offer must also comply with strict legal requirements, including the prohibition against misleading or deceptive or unconscionable conduct.
ASIC’s consumer website, FIDO at www.fido.gov.au contains more information, along with seven safety checks regarding unsolicited share offers. Alternatively, phone the ASIC Infoline on 1300 300 630. For further information contact: Mr Greg Tanzer Executive Director, Consumer Protection Telephone: 07 3867 4704 Mobile: 0411 549 144 Danielle Huck ASIC Media Unit Telephone: 03 9280 3407 Mobile: 0417 540 769